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Friday, November 19, 2004

On the undoubted honesty of publishers

All English publishers are, of course, gentlemen. Every one. (Except the ladies.) And a gentleman's word is his bond. You can depend on him. Above all, a gentleman is honest.

What follows should therefore not be interpreted as in any way a slur upon the good name of English publishers. It is an unfortunate fact, however, that English writers are obliged, occasionally, to do business with foreigners. Distasteful though this is, it can sometimes generate income. Always provided, of course, that you watch what the slippery blighters get up to.

These thoughts are prompted by a quarterly newsletter issued by my accountants. Like most people with financial affairs of anything but the most astounding simplicity, I have to pay an accountant to draw up my tax return. Originally, my accountant was part of a small family firm, but in the course of time that firm merged (as they do) with a much bigger company, and this company (The Fisher Organisation)sends out regular bulletins intended to provide useful information.

This quarter's newsletter contains an article about the licensing of rights. Now don't go off to sleep, because if you are a writer, or even a dedicated reader, the licensing of rights, and the collection of the income generated from such licensing, is a matter of supreme importance.

And, just to hold your attention, let me say immediately that what my accountants have to say reveals -- well, not dishonesty exactly, for that would be unthinkable -- but a certain, shall we say, carelessness with other people's money.

Suppose you are a firm which has developed a widget. You decide to make money from this widget by selling it abroad, and to do that you license the right to make and sell the widget to, say, a firm in Venezuela. Under the terms of the contract, you, the originator of the widget, will be entitled to a royalty on every widget made and sold in Venezuela.

It seems that this is so frequent a practice that the firm of accountants that I deal with has a whole division, the Forensic division if you please, which is devoted to nothing else but checking up, on behalf of British widget-makers, that they are being paid the full and proper amounts of cash for licensing their widget.

And what the writer of the article, the head of the Forensic division, has to say is this: 'When we are appointed to carry out a licensing audit for a new client, we invariably find that the businesses to whom it has granted licenses are not making an accurate report of relevant sales and allowable expense.'

Note that word invariably. The writer says that he is 'unable to recall a single instance where this has not been so.' But not always for criminal reasons. 'Sharp practice is not always involved.' Sometimes, as I mentioned above, it can be just carelessness.

Now -- you will have been wondering all along what this has to do with publishing. And the point is this. Every book which is published is issued under the terms of a contract between the writer and the publisher. Typically, an early sentence in the contract will state the 'the Author hereby grants to the Publishers the sole and exclusive right and licence to produce and publish...'

In other words, a book contract is a small-scale licensing agreement. Often a very small-scale agreement indeed, involving pitifully small amounts of moolah. But it is, nevertheless, a licensing agreement.

And if it is true that the Forensic division of a major firm of accountants invariably finds, on investigation, that businesses operating under the terms of a licence are -- not to put too fine a point on it -- underpaying the party from whom they obtained the licence (purely through carelessness and administrative error, of course) then perhaps it would pay writers to give a little thought as to what extent their publisher might, perhaps, be underpaying them.

Should an author wish to launch a formal investigation into the extent of payments, provision is normally there in another fairly standard clause of a publishing contract. Typically, it will say something like: 'Upon reasonable notice and during the Publishers' normal business hours the Author or the Author's representative shall have the right to examine the Publishers' records of account at the place at which they are normally kept....' And so forth.

There are, however, drawbacks. First, most authors are hopelessly ill equipped to investigate accounts themselves. Secondly, it costs a great deal of money to send in the Forensic division of a major firm of accountants (anything less than £150 an hour seems very unlikely to me). And third, the sending in of the heavy mob would be interpreted by the publisher as a declaration of war, and you could forget about doing any more books with that firm -- or, I suspect, any other, because the word gets around. It is, as I remarked some posts ago, but a short step from being labelled Difficult to being labelled Absolutely Fucking Impossible.

What do we actually know about the payment of sums due from publishers?

Well, the article in the accountants' newsletter referred to above quotes an example. The Forensic division was appointed by a firm of UK publishers who had licensed the rights to a bestseller to a French publisher. On investigation the Forensic boys found that 'our client was entitled to a much greater sum' than had actually been paid.

There are also some well documented instances of major underpayments to authors. In particular, I wrote about one such case on 12 April.

And, finally, it is worth noting that the Society of Authors regularly runs audits on behalf of its members. Every so often a few names are chosen at random, and, with the members' agreement, the Society looks into the publishers' records and checks whether the authors have been paid the right amounts. This independent procedure, checking up at one remove, so to speak, seems to protect the authors from any bad feeling in the chosen publishers' offices. I no longer subscribe to the Society's journal, The Author, so I can't quote any recent figures for the outcome of such investigations, but my memory tells me that errors were by no means unknown. None of them, naturally, were the result of deliberate dishonesty. But these days you just can't get the staff.

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